BBC system of governance is ‘broken’ say MPs

The BBC’s system of governance is “broken” and the corporation has a “limited amount of time” to show it can work, accordingly to a highly critical report into the executive payoffs scandal by the Commons public accounts committee.

Persistent critics of the BBC’s executive redundancy payments, MPs on the committee turned their fire on the BBC Trust and senior management over their handling of the payoffs in their latest report on Monday, accusing them of failing to challenge the redundancy payments and prevailing culture at the corporation, in which “cronyism was a factor that allowed for the liberal use of other people’s money”.

Trust under fire

The PAC, chaired by Labour MP Margaret Hodge, directed most of its ire on the BBC Trust, saying it had failed in one of its primary duties, ensuring the “rigorous stewardship of public money”.

This criticism is likely to renew the pressure on BBC Trust chairman Lord Patten, who has already been under fire over the governance and regulatory body’s performance over the past year.

The PAC said the redundancy payoffs affair had exposed “a dysfunctional relationship” between BBC management and the trust “that casts doubt on the effectiveness of the BBC’s governance model”.

“At present the governance model is broken. The trust and the executive have a limited amount of time to demonstrate that the current governance model can be made to work,” the PAC concluded.

“The unedifying disagreements between witnesses and the conflicting accounts of what was disclosed about individual severance payments are symptomatic of a wider breakdown in the relationship between the BBC Trust and the executive.”

It “beggars belief” that the trust did not locate key documents about BBC executive redundancy payments, the PAC said, contributing to “confusion and lack of transparency” about what had been proposed, discussed and approved.

“By choosing not to challenge very large individual severance payments, the BBC Trust and its officials failed to fulfil one of its primary duties, which is to ensure the rigorous stewardship of public money,” MPs added.

“The BBC Trust approves the strategy for executive remuneration but does not examine its implementation in detail. The witnesses from the BBC Trust told us that they do not question individual payments as they are operational decisions for which the BBC executive remuneration committee is responsible. In our view, this is too narrow an interpretation of the BBC’s Trust’s responsibilities.”

Management criticised

The PAC was also critical of the BBC senior management, saying non-executive directors on the executive board remuneration committee “failed to provide an effective check on severance pay for the BBC’s most senior staff”.

A BBC spokesman said: “One of Tony Hall’s first acts on his appointment was to cap payments at £150,000 – the committee welcomed his decision.”

Responding to the criticisms in the report about the corporation’s governance, he said: “There needs to be absolute clarity over the responsibilities of the trust and the BBC executive and we have already acted and announced a range of changes to deliver that.”

A BBC Trust spokeswoman said the PAC’s work had “helped inform” the corporation’s plan to simplify the way it was run which were announced last week.

“We have already announced measures that address the committee’s call for more rigorous scrutiny of the BBC’s performance and clarify the charter’s requirement that the BBC executive manages the BBC while the trust represents the licence fee payer,” she said.

BBC measures

Among measures announced by the BBC last week aiming at tackling governance issues and improving the relationship between the trust and management were plans to appoint two more non-executive directors, including former Sony chairman Sir Howard Stringer.

String of payoffs

Monday’s PAC report follows committee hearings in which five current and former executives including Lord Patten, the BBC Trust’s chairman, and Mark Thompson, the former director general, attempted to blame each other for more than £2m of payoffs for senior BBC managers.

Among the payouts given to senior staff were £470,000 to former director general George Entwistle after only 54 days in the job and £680,000 to former chief operating officer Caroline Thomson. Deputy director general Mark Byford departed from the BBC with a total payout of just over £1m.

In a report published in July, the NAO found that the BBC had paid £25m in severance payments to 150 senior staff. Furthermore, it showed that the BBC had paid 14 staff more than it had been contractually obliged to.

Thompson, who is now the chief executive of the New York Times, released a statement rebuffing claims of wrongdoing by former BBC staff.

“The members of the PAC are entitled to criticise the result, but the decision to make the settlement was made in an entirely proper and transparent way.

“Despite some inflammatory language in the PAC report, there is absolutely no evidence of any wrongdoing by anyone at the BBC in relation to these severance payments.”

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